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Dave Gardner: Personal finance's best and worst of 2012

By Dave Gardner, For the Camera

Posted:
12/29/2012 11:27:16 PM MST

Updated:
12/29/2012 11:28:18 PM MST

Here's my shortlist for the best and worst in personal finance for 2012.

First the best:

Record low mortgage interest rates. With Fed Chairman Ben Bernanke purchasing Fannie Mae and Freddie Mac bonds by the fistful, mortgage rates have swooned to incredible lows. Thirty year mortgages at 3.25 percent may be available to those with excellent credit.

If you haven't refinanced recently, shop around with at least two lenders. To simplify comparisons, ask them for a quote for a "no-cost loan" where you pay nothing out of pocket. Use Zillow.com to get a read on current rates. Locking in a payment for 30 years that will not increase with inflation could do wonders for your financial security.

Retirement plan cost transparency. According to an AARP survey last year, 71 percent of retirement plan participants think they pay nothing in fees at all. Nobody invests your money for free and retirement plans are no exceptions.

Starting in July 2012, retirement plans were forced to disclose all fees that you pay through quarterly and annual statements. Now that some surprised savers see that 2 percent of their savings are going to fees, HR departments across the land are reviewing their plans and looking for lower cost options.

Anecdotally, I can tell you that expenses have started to come down with former high cost scofflaws such as insurance companies offering annual fees below 1 percent of the plan balance. While these fee disclosures may be hard to decipher, it's an intense beam of sunshine that will ultimately help those saving for retirement.

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Prepaid mobile phone plans on the rise. Now more smartphone plans can be had at dumbphone prices. Republic wireless (republicwireless.com) offers unlimited talk, text and data for $19 a month with no contract. The catch is you need to purchase an outdated Android phone for more than $200 and the service depends in part on your WiFi connection at home.

Look for new phones to be introduced in the coming year.

Straight Talk (straighttalk.com) offers a $45 plan for unlimited talk, text and data using any GSM phone including the latest Android models. With T-Mobile scheduled to offer iPhone service and high speed LTE data, you'll soon have access to an inexpensive plan as long as you're willing to pay the one-time unsubsidized full phone price.

For those who have been paying $120 a month to keep their iPhone happy, this is great news.

There also are some things we'd like to forget about 2012:

The Fiscal Cliff. Again Congress is unable to get its act together when it comes to taxes and government spending. Barring a last-minute deal, starting Tuesday, income and payroll taxes will increase, government spending will decrease, the government borrowing authority will be exhausted as we run into the debt ceiling, and many unemployment benefits will expire.

It's true that many of these changes can be put off until March through gambits, but our government's ineffectiveness is laid bare for the world to see. Look for changes in our tax system in the early part of 2013. That way Congress can say they voted for a "tax cut" from the higher rates scheduled to go into effect next year.

Missed opportunity on higher education. President Barack Obama came to Boulder earlier this year to campaign in favor of keeping student loan interest rates down. Numerous tuition tax credits and deductions also improve access to high education. But very little focus has been placed on keeping the cost of higher education reasonable.

Indeed by making it easier for students and their parents to borrow, the federal government is a partner in the educational inflationary march.

In 2013, I'm hoping for federal help in keeping higher education costs down, not simply lowering the interest rate on burgeoning loan balances.

Dave Gardner is a certified financial planner with a practice in Boulder County. He can be reached at yellowstonefinancial.com.

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